Suppose that the central bank of the US increases the interest rate in the US from 1% to 3% while the European central bank maintains its interest rate at 0.5%. Answer the following no numbers are required. a) What happens to net capital inflows to the US and net capital outflows out of the US? b) What should happen to the exchange rate of the US dollar in terms of the Euro, the European money? Use the demand and supply model to answer this question. c) What happens to US exports, imports and trade balance ? d) Is it better to have a fixed exchange rate or a flexible exchange rate? Briefly explain your choice